CORESTATE Capital (Real Estate)

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Overview

Corporate overview

CORESTATE Capital Group is an investment manager and co-investor with approximately €25bn in assets under management. As a fully integrated real estate platform, CORESTATE offers its clients combined expertise in the areas of investment and fund management as well as real estate management services. The company operates as a respected business partner of institutional clients and wealthy private investors internationally. CORESTATE is headquartered in Luxembourg and has 42 offices including in Frankfurt, London, Madrid, Singapore and Zurich. The company employs over 900 people and is listed in the regulated market (SDAX) of the Frankfurt Stock Exchange.

Strategic corporate development

With the recent acquisitions and mergers CORESTATE has broadened its customer base and product offering. The group will strengthen ties with international institutional investors and penetrate existing clients more deeply with a broader range of services. Among institutional investors, CORESTATE concentrates not only on Germany, but also on other European countries and the Asia-Pacific region.

On the product side, CORESTATE aims to expand asset classes and markets from the current German-speaking regional focus to select regions in Europe. That means, for example, the expansion of micro-living, office and HFS Mezzanine funds in Europe and the expansion of light industrial (technology parks) in Germany.

The subsidiaries Helvetic Financial Services (HFS) and UPARTMENTS Real Estate are market leaders in the area of mezzanine financing and managing micro apartments. This market leadership will be further expanded and deepened in the future.

CORESTATE has an excellent network of brokers, which ensures early access to properties with a deal pipeline of €5.7bn. The group also aims to achieve further inorganic growth. The target company must fit in perfectly and should complement our range of services, if possible. The company must also have a value-generating and sustainable fee and earnings structure or it would not meet CORESTATE’s strict acquisition criteria.

Sector forecasts

OFFICE: The office sector has been the one with the highest transaction volume in the German commercial real estate market since 2013. High demand in the metropolitan areas, low vacancy rates and the pressure to invest have pushed prices to a plateau – where we expect them to remain over the mid-term. Framework conditions such as the strength of the German economy certainly remain auspicious for the sector.

RESIDENTIAL: We still see a strong development of the residential investment market in Germany, with rising transaction volumes and a strong product offering. Yet we believe that the prices we see in the market are at the upper end of the spectrum. Yield compression is limited to prime locations and cities. For our institutional investment products, we focus investments on sustainable, attractive micro-locations in strong A- and B-cities to safeguard an attractive risk-return profile.

RETAIL: Many investors have become extremely cautious of retail as shifting consumer preferences and demands are providing for a massive change in the sector. Not all retail schemes will survive this shift but we are confident that food-and convenience-anchored retail remains attractive. Looking at the high street, some retail schemes will be replaced by gastronomy or event-driven concepts but the underlying mixed-use asset is still a good investment.

OTHER: We are still at the beginning of the cycle in the micro-living niche asset class. A substantial supply-demand imbalance in single-person housing across Europe offers significant development and investment potential over the coming years. The demand is driven by several mega-trends, including urbanisation. We are seeing population increases in cities with strong economies that offer good job prospects and excellent universities. These locations are attracting workers willing to travel to find employment as well as the student population – and both are looking for micro-apartments.

Investment principles & strategy

As an investment manufactory, we demonstrate a high degree of entrepreneurial creativity and flexibility, which is reflected in the development of our investment products. These are always aligned with current market phases and macro-economic trends. While the company focused primarily on residential real estate in the early years, our investment focus subsequently shifted to include micro-apartments for singles, commuters and students, and ultimately retail properties. Today the group also focuses on hotels and office buildings. We will continue to readjust our focus whenever we identify economic potential in new segments.

CORESTATE is a trusted partner for institutional investors/pension funds, family offices/UHNWI and private investors. As a fully integrated investment and management platform we understand the DNA of our assets and provide investment products and corresponding services that create a lasting value for our clients. Our platform encompasses investments across the risk spectrum from core to opportunistic.

Compliance Statement

Commentaries on economy and financial markets contained in this publication are based on information believed to be reliable, although there can be no guarantee as to its accuracy. They reflect the current opinion of CORESTATE, which is subject to change based on the development of the economy and financial markets.

Hannover Leasing, a CORESTATE Capital Group company, has acquired an office building in Düsseldorf-Oberbilk. The new building has been fully leased to Unfallkasse NRW which is opening its new headquarters at the property and will move in with around 500 employees by the end of next year. A rental agreement with a 15-year term and no special right of termination has already been signed. The price amounts to just under EUR 55.5 million. The seller is the Essen-based project developer ...

CORESTATE Capital Holding S.A. continued its profitable growth in the first nine months of the year. Including the recent acquisition of CRM Students, its assets under management now amount to more than EUR 25 billion.

White Papers / Research from CORESTATE Capital (Real Estate)

Investors’ interest in the asset class of retail parks and retail park oriented shopping centers remains high. This is primarily due to the favorable risk/return ratio and the overall good performance of this asset class. Luxemburg-based Corestate Capital Group is currently also assessing the possibility of investing in a new retail portfolio with a total of ten retail parks. Sascha Wilhelm, CEO of Corestate, dicusses these issues.

This survey is a consistent continuation of the work done by the CORESTATE Research Unit for Distressed Real Estate Debt. In 2012, REMI’s discussion paper No. 4 focused on the market for distressed real estate assets and investigated the financing and investment climate in order to identify potential opportunities and threats to investors. Based on this paper, a survey about the current situation on the commercial real estate financing market is conducted annually among decision-makers ...

Hannover Leasing, a CORESTATE Capital Group company, has acquired an office building in Düsseldorf-Oberbilk. The new building has been fully leased to Unfallkasse NRW which is opening its new headquarters at the property and will move in with around 500 employees by the end of next year. A rental agreement with a 15-year term and no special right of termination has already been signed. The price amounts to just under EUR 55.5 million. The seller is the Essen-based project developer ...

CORESTATE Capital Holding S.A. continued its profitable growth in the first nine months of the year. Including the recent acquisition of CRM Students, its assets under management now amount to more than EUR 25 billion.